While Belleville city leaders and residents may not yet know the full economic impact of Lindenwood University’s decision to end its daytime undergraduate program in Belleville, they can look at a key economic barometer since St. Elizabeth’s Hospital left town.
The city’s share of sales tax revenue, which is based on the purchases made in the city, has increased since St. Elizabeth’s Hospital relocated to O’Fallon in November 2017.
Sales tax revenue is the largest single source of revenue annually for the city’s general fund, which supports the day-to-day operations of running the city such as paying salaries for police officers, firefighters and other city employees.
For the 2018-19 fiscal year that ended on April 30, the city received $6.58 million in sales tax revenue, which was a 3.21 percent increase from the prior fiscal year. This revenue represented about 24 percent of the general fund of about $28.1 million and the increase was the largest in the past six years.
Businesses near the hospital have said their sales were hurt by the closure of St. Elizabeth’s, but businesses citywide have continued to make increased sales.
“Sales tax overall in the city is not down,” Mayor Mark Eckert said. “We’re not plummeting because of any of these things. But we’ve had some new things go into effect that we didn’t have not too many years ago.”
Ward 8 Alderman Roger Wigginton, who previously served more than 10 years on the Capital Campaign Committee formed to support Lindenwood University-Belleville, said the loss of car dealerships that moved from Belleville to sites near Interstate 64 several years would have a greater economic impact on the city than the loss of Lindenwood’s undergraduate program, which will happen at the end of the 2019-20 school year.
“It’s a constant battle of trying to educate the public to do as much business in Belleville as possible so that we can keep the same level of service available to our citizens, police and fire and all those things,” Eckert said.
While the sales tax revenue is one of economic facets of the loss of St. Elizabeth’s and the reduction in Lindenwood’s academic programs, the other factors include redeveloping the former St. Elizabeth’s site and the Lindenwood campus if Lindenwood closes its night programming and reviewing the use of TIF grants awarded to Lindenwood in 2003.
Redeveloping St. Elizabeth’s land
Since St. Elizabeth’s relocated to O’Fallon, the hospital has demolished its buildings in downtown Belleville and plans to landscape the site off Third Street as part of its effort to sell the site.
Eckert wants St. Elizabeth’s to give the property to the city so it can find a new use for the land.
“I do believe that at least the 10 acres that the hospital original site was on, I think should be donated to the city. I think they ought to give us the opportunity to develop it,” Eckert said. “I don’t think our request is being unfair.”
However, the parent organization of St. Elizabeth’s Hospital, the Springfield-based Hospital Sisters Health System, or HSHS, said it intends to move forward with its plan to sell the land.
“We understand the city’s position and desire for this property. We’ve had numerous discussions over the last two years with local leaders, including Mayor Eckert, about our intentions to sell the property for future development,” St. Elizabeth’s Hospital spokeswoman Kelly Barbeau said in an email. “HSHS has invested $20 million to restore the site and implement the landscaping plan to make it more appealing for future development. HSHS St. Elizabeth’s Hospital still has over 200 employees working in downtown Belleville, offering physical therapy, imaging, laboratory services and other administrative services in the renovated buildings adjacent to the property.”
Eckert noted that for over 140 years the city provided police and fire service to the St. Elizabeth’s Hospital, which did not pay property taxes used to support the pension funds for the city’s retired police officers and firefighters. The hospital is a private, nonprofit group and did not have to pay property taxes on its main buildings. It does pay property taxes in some cases, such as when it leases space to independent physicians.
Future of Lindenwood’s campus
If Lindenwood continues to downsize its presence in Belleville and then pulls out completely, what do city leaders plan to do? Would another college buy it? Would a high-tech incubator take over the campus?
“It’s way too early to sit here and say we have a plan,” Eckert said in response to Lindenwood’s announcement on May 13 that it would end its daytime undergraduate program. Lindenwood said it would continue to offer night classes as it did beginning in 2003.
“We’re going to explore every possibility for what might fit for that Lindenwood campus,” Eckert said. “We’re going to have to roll up our sleeves and we’re going to. We’re not quitters. You know Belleville has reinvented itself time and time again.
“Things have changed here and we had to regroup and we will continue to that,” Eckert said. “There’s always a few that want to cast stones and say, ‘Well, you let this slip away, you let that slip away.’ Usually the people that are casting the stones are clueless (as to) what’s been going on in so many different fronts to stabilize or grow these things or bring them under control and they’re basically clueless about all the efforts and all the time spent, but that’s OK.”
Ward 6 Alderman Chris Rothweiler, who was elected April 2 and criticized Eckert during the campaign, posted a Facebook message last week that included, “Our part time economic director & mayor were ‘caught by surprise’ again...just like when St. Elizabeth’s abandoned their mission here. It’s time for an aggressive economic development director & program.”
But Eckert said Annissa McCaskill remains as full-time economic development director. He said he was “extremely disappointed” in Rothweiler’s comments and that Rothweiler should “let the campaign go.”
In January, the City Council approved a plan to give McCaskill a pay raise and additional duties as interim director of the newly created Residential and Commercial Development Services Department.
Eckert and Wigginton both noted that Lindenwood has kept the former Belleville West High School campus in good physical shape.
Eckert said Lindenwood’s interim President Art Johnson told him that the university had invested more than $40 million in the campus since 2003.
“It is showroom perfect,” Wigginton said of the campus building improvements and two new dormitories Lindenwood built.
Lindenwood also bought and renovated over 50 homes and apartment buildings for student housing.
“That corridor today is in so much better shape and condition than what it was when Belleville West moved,” Eckert said.
“That doesn’t take away the challenge, that doesn’t take away the sting of this sudden change of direction here,” he said. “But I’m very optimistic that we’re going to continue to make good things happen in that corridor but we’re in much better shape than what we were.”
In March 2003, when St. Clair County Board Chairman Mark Kern was the mayor, the Belleville City Council agreed to give Lindenwood $3.3 million in tax increment financing (TIF) grants and Lindenwood agreed to invest at least $1.4 million on the campus by 2008 and to make payments in lieu of taxes for a total of $385,000 over the 20-year period.
As part of three-way deal, Belleville High School District 201 sold the former Belleville West campus for $1 to the city which would then transfer ownership to Lindenwood.
The city had to give Lindenwood $300,000 in the first two years of the contract for asbestos abatement and remediation, according to the development agreement released by the city under a Freedom of Information Act request.
Also, the city agreed to give the school $3 million in TIF grants in the form of $150,000 payments annually for 20 years. The money for these payments come from TIF District 3, which expires in 2021. Under this scenario, the money collected in the last year of the TIF district would be paid to the city in 2022.
Lindenwood was required to make a payment of $10,000 in lieu of taxes in 2003; $15,000 in 2004 and then $20,000 a year until the TIF grant program ended.
If the agreement carries on through 2021 to the end of TIF District 3, Belleville would have given Lindenwood a total of $2,915,000 after receiving the payments in lieu of taxes.
In a TIF district, property values in the districts are frozen at their current levels for a 23-year period and any additional revenue generated by a rise in property values is channeled into a special fund earmarked for infrastructure improvements and economic incentives in the district.
TIF District 3 covers most of the city and was established in 1986. The life span was extended once as permitted and the district will expire in 2021.
Development agreement review
Eckert said the development agreement signed with Lindenwood in 2003 will be reviewed by City Attorney Garrett Hoerner to ensure that the college has fulfilled its obligations.
“We’re going to review everything,” Eckert said.
But looking at the amount of money Lindenwood spent in Belleville, Eckert said he thought the city’s TIF payments to Lindenwood were “absolutely” worth it.
“They had a dynamic impact on our community,” Eckert said. “The positive economic impact from Lindenwood has done just what we had hoped it would do.”
Wigginton agreed with Eckert about the development agreement with Lindenwood.
“The economic development has been huge,” Wigginton said.
He said the former Belleville West campus was in poor condition as District 201 was building a new high school building off Frank Scott Parkway West near Illinois 15.
“It was a great deal for Belleville, it was a great deal for Lindenwood,” he said. “Belleville was a phenomenal partner from Day 1.”
Wigginton said Lindenwood had the “wherewithal to come in” and reinvest in the former Belleville West campus.
“Those type of people just don’t fall out of tree.”
BEHIND OUR REPORTING
Why the BND published this article
Since Belleville lost St. Elizabeth’s Hospital November 2017 and the daytime undergraduate programs at Lindenwood University-Belleville will end after the next school year, we wanted to examine some of the potential economic impacts of these changes on the city’s residents and the city’s operating budget.
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We would like to hear from you. What is your suggestion for the St. Elizabeth’s site and the remaining Lindenwood buildings? Contact reporter Mike Koziatek at email@example.com or 618-239-2502 with your comments.